Major institutional investors back stock exchange sustainability reporting

Ceres project supported by BlackRock, New York Common and PRI

Sustainability advocacy group Ceres, in collaboration with BlackRock, the world’s largest asset manager, and other major institutional investors, have teamed up with trade body the World Federation of Exchanges (WFE) on a possible uniform reporting standard for sustainability reporting by all exchange members.
It follows the setting up this week by the WFE of a sustainability working group and includes recommendations for integrating environmental and social disclosure requirements into listing rules for companies listed on US and global stock exchanges.

The initiative – Investor Listing Standards Proposal: Recommendations for Stock Exchange Requirements on Corporate Sustainability Reporting – has the backing not only of BlackRock but also the likes of the New York State Common Retirement Fund, the Principles for Responsible Investment (PRI), Calvert Investments, SNS Asset Management, the Global Reporting Initiative, Pax World Management and Domini Social Investments.

It will be formally submitted this week to WFE members alongside the launch of an exchange comment period that will run for several months.
Tracey Rembert, Ceres’ senior manager for investor engagement, says the idea for the proposal came about three years ago, when a handful of investors contacted stock exchanges and asked them to considerrequiring listed companies to disclose more of their material non-financial data.

This led to Ceres drafting a set of specific guidelines last spring, and opening a formal period for investor comments last April and May (to which over 100 investors responded). When Ceres learned of the sustainability working group forming within the WFE, Rembert says, the organization decided to engage the world’s exchanges through that group, and to time the release of their report to coincide with the WFE’s announcement.

Overall, Rembert says, the suggestions within the proposal are designed to “push issuers to disclose in more quality, in more depth, and with more consistency” on ESG factors. Specifically, the proposals focus on improving reporting in three main areas: companies’ assessment of which environmental and social factors are material to their investors; systemic risk issues; and the way ESG-related information is presented (the proposal recommends the companies be required to publish a straightforward “disclosure index” linking interested investors to relevant ESG data).

The proposal was developed by Ceres’ Investor Network on Climate Risk (INCR) and its member-driven Investor Initiative for Sustainable Exchanges.